By Carolyn Cui
Sugar futures declined Thursday, snapping a six-day winning streak, after the Indian government said it had no plan to cut import duty in the near term.
Raw sugar for March delivery fell 0.5% to settle at 20.78 cents a pound on the ICE Futures U.S. exchange, reversing its 15% gain during the past six sessions.
The sugar market had been on a tear after Unica, Brazil's sugar industry group, released data indicating that mills in the world's largest growing region have largely stopped for the crushing season. The rally continued as more reports from Thailand and India indicated crops there were smaller than expected owing to delayed effects of the El Nino weatherphenomenon.
Sugar traders were expecting the Indian government to lower its import tariff from 40% to allow more imports, but the Indian Sugar Mills Association argued that domestic supplies and inventories should be sufficient to satisfy India's falling demand.
Sugar production in India, the world's second-largest producer, is estimated to be around 22.5 million to 23.5 million tons, falling short of its estimated consumption of between 25.5 million and 26 million tons, according to Sucden Financial Research. Sugar prices in local markets have been rising amid a drop in production, fueling speculations that the government would be forced to allow more imports.
"The prospect of reduced production has caused a rather dramatic reaction in India; I think it is looking more likely" for them to source sugar from the international market, said Michael McDougall, director of commodities agency at Societe Generale.
But traders, who were closely monitoring any decision by the Indian government on sugar tariffs, were disappointed on Thursday when the country's trade minister reiterated the government's stance on the policy, stating it wasn't expecting to cut the import duty in the near term.
In other markets, cocoa for March was up 1.1% to close at $2,262 a ton, arabica coffee for March gained 1.4% to end at $1.4375 a pound, frozen concentrated orange juice for March was down 1.9% to $1.9030 a pound and March cotton fell 0.4% to 73.78 cents a pound.
(END) Dow Jones Newswires
January 05, 2017 15:12 ET (20:12 GMT)
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